Wall Street finished mixed as investors reassessed a slew of tech earnings and economic data. Tech woes continued to send Nasdaq lower, while Dow extended its fifth-straight trading day gains due to the relief rally that was sparked by a further decline in the US bond yields. Meta Platforms plunged 24% to a six-year low, amid disappointing earnings and weak guidance, wiping out $100 million in its market cap overnight. Amazon’s earnings also came as weaker-than-expected, with its shares down 16% in extended hours, though Apple beat Wall Street’s estimates but with a light iPhone sales revenue. The big tech earnings for the past quarter were certainly not rosy, putting the businesses’ conditions in doubt.
On the economic front, the US third quarter GDP printed at 2.6%, topping an estimated 2.3%, but the detailed data indicates a gloomy outlook towards the fourth quarter as consumer spending on goods shrank. While the US 10-year bond yield fell back to under 4%, bets for a Fed’s slowdown on rate hikes have grown, with rate futures markets pricing a 50 bps in the December meeting, though a 75-bps hike is still on the table next week. Can we hope for a Christmas rally by then?Click to enlarge the table
- Dow was up for the fifth session, while Nasdaq continued to be under pressure due to awful tech earnings. 6 out of 11 sectors in the S&P 500 finished higher, with industries leading gains, up 1.14%. The Communication Services sectors however, slumped 4.1% due to Meta's plunge. Technology stocks also fell by 1.2%.
- Amazon’s shares plunged 16% in after-hours trading due to a miss on its AWS revenue. The company reported 28 cents per share and $127.10 billion in revenue, lower than an estimated $127.46 billion. The core business, the AWS revenue came to $20.5 billion, short of the $21.1 billion expected.
- Apple’s shares slid 1.6% in after-hours trading as its iPhone sales revenue was light, despite a beat on expectations for both EPS and revenue. The iPhone maker’s EPS is $1.29 vs. the $1.27 expected. The revenue is at $90.15 billion vs. the $88.90 billion estimated. But the iPhone sales are at $42.63 billion, lower than an estimated $43.21 billion.
- Credit Suisse shares plunged 18% after the bank reported a huge loss of 4.034 Swiss francs in the third quarter, well above a loss of estimated 567.93 million Swiss francs. The bank revealed an overhaul of its business to address underperformance in its investment bank, which may cost 2.9 billion Swiss francs.
- ECB raised interest rates by 75 basis points for the second consecutive time, bringing the main refinancing rate to 2%. But the central bank will not discuss its 8.8 trillion-euro balance sheet unwinding until December, which caused a slump in the Eurodollar against the US dollar, with EUR/USD falling 1%, back to under the parity level to just above 0.9960.
- Asian markets are set to open lower due to negative tech earnings on Wall Street. ASX futures were down 0.38%. Nikkei 225 futures fell 0.92% and Hang Seng Index futures slid 0.24%.
- USD/JPY bounced off a day-low ahead of the Bank of Japan’s policy meeting later today when the bank is expected to keep its dovish stance on the ultra-losses monetary policy. But any surprising turnaround may bring huge volatility in the currency markets.